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HRA 11/18/1982 - 293800 CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING NOVEMBER 18, 1982 CALL TO ORDER: Chairperson Commers called the November 18, 1982, Housing & Redevelopment Authority meeting to order at 7:34 p.m. ROLL CALL: Members Present: Larry Commers, Elmars Prieditis, Carolyn Svendsen, Duane Prairie, Walter Rasmussen Members Absent: None Others Present: Jerrold Boardman, City Planner Gerald W. Paschke Sid Inman, Finance Director Bill Von hug, Von Klug & Assoc. Richard M. Carson, President, Clothing Liquidators 0 CONTINUED: APPROVAL OF JULY 21, 1982, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO APPROVE THE JULY 21, 1982, HOUSING & REDEVELOPMENT AUTHORITY MINUTES.AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF OCTOBER 19, 1982, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRIEDITIS, TO APPROVE THE OCT. 19, 1982, HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. I. OLD BUSINESS AND CONTINUED ITEMS A. Proposal from Gerald W. Paschke (Continued from 10- 19 -82) (Letter from Mr. Paschke dated Oct. 5; Memo #82 -77 from Executive Director) Mr. Boardman stated he would like Mr. Paschke to explain his request for aid from the HRA. 0 • HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18, 1982 PAGE 2 Mr. Paschke stated he has started work on a 4 -acre piece of property on Main St. between 81st and 79th. He stated they excavated approx. 12,000 ft. of peat before they stopped. He stated he had talked to Mr. Boardman 6 -7 months ago about obtaining some help from the HRA. It was his understanding at the time that anything that was done in that area had to go out for bids. Since they do all the work themselves, that would not help them very much. He stated that if the HRA would just give them the fill, they would do their own excavation, placing the fill in and compacting it, which was about the cheapest way he knew of to develop this area. Mr. Commers asked Mr. Paschke if he had any estimates of how much fill would be needed. Mr. Paschke stated he would estimate 15,000 yards. He has had some quotes at $2.50 /yd. delivered to the site. He stated he thought they could put in a 40,000 sq. ft. building on that site. Mr. Boardman stated he has done some quick estimates based on some of their bond estimates with the 70,000 sq. ft. building Elo Engineering was looking at earlier, and the HRA can provide assistance anywhere from $2.10 -2.60 per sq. ft. of building that goes in on Mr. Paschke's site. That would be the range on the bond issues as the bond issues were sold. A 20,000 sq. ft. building would have a bond sale of approx. $50,000. So, the HRA could probably assist to that extent. He stated the HRA can work with Mr. Paschke in providing some assistance, but that assistance would not come until there was a commitment for construc- tion. It is a matter of what the HRA wants to.do on that property. There are some buildings under way there. Mr. Paschke has just finished a building on the corner that the HRA will gain some development monies from. However, they have to be a little cautious in that area, because there is going to be a considerable amount of drainage and ponding required. Mr. Prairie asked if it was possible for the HRA to make a commitment for "x" amount of dollars. Mr. Boardman stated that was not done in the sense that the HRA is still commiting itself and they are saying, yes, they have "x" amount of dollars, and if Mr. Paschke goes ahead, the HRA will pay him back. The HRA could open itself up to quite a bit of negative comment. The HRA has consistently said they would prefer not to do that and would prefer not to take on any project until there is a financing commitment. He did not know the legality of the HRA paying for things that have already been paid for. Mr. Paschke stated he very seldom has any financing until a project is completely finished. • Mr. Commers stated it would be fine if Mr. Paschke wanted to give a guarantee that he would do his own construction financing. It didn't matter how it was done. !i HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18, 1982 PAGE 3 Mr. Boardman stated it didn't matter how the project is financed, as long as it is on paper and there is a guarantee the building is going to go up. If there is a default and the building does not go up, the HRA doesn't have the taxes that would be generated on that building to pay off the work or the money the HRA puts into it. Mr. Paschke stated he has three projects that are going into the tax increment district-or the HRA, and he has not received any financial assistance on those projects. Mr. Commers stated it would be appropriate for Mr. Boardman and Mr. Paschke to sit down and work out an agreeable proposal to be brought back to the HRA at their Dec. meeting. He stated he did think they should get a report on the income they are generating on these three projects. If they are generating tax increment dollars from three of Mr. Paschke's properties, that may be something the HRA will want to take into consideration. MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO CONTINUE THIS ITEM UNTIL THE DECEMBER MEETING, AND TO ASK STAFF TO WORK WITH MR. PASCHKE TO WORK OUT AN AGREEABLE PROPOSAL TO BE BROUGHT BACK TO THE HRA AT THEIR DEC. 9TH MEETING. • UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Paschke stated the special assessments on this property are 3 -4 times higher than anywhere else, and he would also like some assistance in paying off the special assessments. Mr. Commers stated this was something else Mr. Boardman should address and report back at the next meeting. They may run into this same problem with other developers. B. NAHRO Request for Funds (Continued from Oct. 19, 1982) Mr. Commers stated the HRA members had a copy of a letter dated Oct. 28 from Mr. Herrick in response to the HRA's request on the legality of contributing funds to NAHRO. Mr. Herrick was of the opinion that this would be a valid expenditure of funds and would not jeopardize the HRA's tax status. Mr. Boardman stated he had called other HRA's as well as Nancy Reeves, Chairperson of the Legislative Committee, to get an indication of any tax status effects on the donating cities. The response was that the pledge is to NAHRO as an organization to help cover the costs of NAHRO activities and is not affecting any individual HRA. NAHRO is consulting for legislative assistance similar to the League of Cities and other non - profit organizations and is not paying for registered lobbyists. 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18, 1982 PAGE 4 MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRIEDITIS, TO SEND A CONTRI- BUTION OF $250 TO THE NAHRO OFFICIALS. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. C. Memo from Sid Inman - Government Accounting Problem Mr. Commers stated the HRA members had raised a question at their last meeting regarding the separation of powers between the City and the HRA. They had requested that Mr. Inman and Mr.Herrick attend this meeting to better explain that problem. Mr. Inman stated Mr. Herrick could not be at the meeting. He stated the issue that is' of concern is informing the City Council that in an extreme situation they have a liability; they have complied with, and the auditor has concurred. Whether the City reports the HRA on the City's financial statement or not is really irrevelant, other than cost. When George M. Hanson Co. has done the HRA's audit in the past, they have merely walked in and done it. In this case, the City will have prepared documents ahead of time. That should, in fact, reduce the auditor's bill. The major part of the expenditure will be the City preparing the HRA's documents for the City's report, and the City istands to bear some of that load, because it is the City's responsibility. The HRA will see no increase in their month -to -month statements, and the City is going to try to estimate for the HRA what it will cost. Hopefully, it will not cost any more than the HRA has received from their auditor. This is something new, so it is really hard to say how much it is going to cost. Mr. Commers stated that at least now they know what their auditor's cost is; it is a fixed cost. If the City is going to prepare it and then turn it over to the auditor to provide the HRA with an audited statement, there may be an added cost. What he heard Mr. Inman saying was that the City is going to include the HRA in their financial state- ment, other than in a footnote. Mr. Inman stated he does not have any decision power. The City Council has the decision power, and the auditor has clearly said that if the City does not include the HRA, they could jeopardize their Certificate.` of Conformance. Again, that has no affect on the HRA, other than whether'or not the HRA pays the City to do that. Mr. Commers stated there are some questions as to the auditor's opinion in the first place. There is nothing set down. They are asking that the criteria be extended and not be implemented for another year. There is no information whatsoever that this is a necessary requirement or the criteria that has to be met in order to get the Certificate of Conformance. He did not see why the City was going ahead and doing it. If the City.decides to do it, it should be the City's obligation and not the HRA's and the HRA should not have to expend any more money. HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18, 1982 PAGE 5 Mr. Inman stated if the HRA was of the opinion they would like to have the auditor do the whole report, he was willing to accept that. The report the auditor prepared has to be combined in the City's report. He agreed that if the City chooses to make that decision, it should be the City's responsibility, but that was not his decision to make. Mr. Inman stated that as far as Mr. Comers' comment on the criteria, the decision in 1979 on two similar issues was they did lose the Certificate of Conformance because they chose not to do the two activities because of the fact that it wasn't extended. Because of that, he would be very reluctant not to include it in the City's report. It was the consensus of the HRA members that if the City makes the decision to include the HRA in the City's report, the City should bear the cost of doing that. Mr. Inman stated that if this decision is made that it is the City's responsibility and they will do it, if he prefers to present the report to George M. Hanson Co. and the City is willing to bear the cost, would the HRA be willing to let him do that? Mr. Commers stated the HRA was willing to reimburse the City for what- ever it would cost the HRA to hire an outside auditor to prepare the • report. D. Check Register MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO APPROVE THE CHECK REGISTER DATED NOV. 16, 1982, TOTALLING $309,754.49. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. E. Financial Statement Mr. Boardman stated he had given the HRA members a breakdown of personnel and supplies as requested at their last meeting. Mr. Inman reviewed the financial report with the HRA members. MOTION BY MR. PRAIRIE, SECONDED BY MS. SVENDSEN, TO ACCEPT THE FINANCIAL REPORT DATED NOV. 18, 1982. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Comers declared the InterDesign contract summary dated Nov. 18, 1982, accepted and received into the record.for informational purposes. He stated he felt InterDesign should report to the HRA on a quarterly basis. 04 HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18, 1982 PAGE 6 II. CENTER CITY A. Report & Claim - Relocation of Lennies' Laundromat Mr. Boardman stated that Mr. Von Klug was at the meeting to explain his report. Mr. Von Klug stated the relocation of Lennies became more complex than was originally anticipated. Lennies had a unique relationship with the landlord. With items that were normally attached to the building and could have been classified as part of the building, Lennies not only had the right to remove those items, but had an obligation to remove those items. These items were, in essence, personal property. Mr. Von Klug stated he confirmed with the real estate appraiser who was previously hired that, indeed, he did not include those items with the real property. As a result, they became aware they were responsible to pay relocation costs on those items. The items referred to are included in an appraisal done by Patchin Appraisers. Those items were "process electrical ", "process plumbing ", "raised concrete floor ", "door openers ", and "vent system ". Mr. Von Klug stated the next step was to determine the least cost approach. He stated the least cost approach is a strange thing in • the relocation process, because they still have an obligation by Minnesota State Law to make sure the business gets the maximum com- pensation it is entitled to. They had an appraisal done by Patchin Appraisers called a fixture appraisal; also referred to as an "in- place value appraisal ". The "in -place value appraisal" came to $67,670. That was for the bulk of the items that were attached in some type of fashion to the building. In addition to those items, Lennies very clearly had personal property such as washing machines, laundry carts, wastebaskets, desks, arcade machines, etc., so they got a moving cost estimate on those items. The total cost of the "in- place value appraisal" and the moving cost estimate was almost $75,000. Mr. Von Klug stated that in going back to the fixture appraisal done by Mauser and in going through Lennies, he noticed there was a certain amount of duplication under "process electrical ". Though they did not include in the real estate appraisal the 400 amp and 200 amp service throughout the building, they did include some electrical and some plumbing. Though it is not a good idea in the relocation process to negotiate relocation costs, it became evident, mainly from the needs of Lennies, that it would be a prudent thing to do. So, with the concurrence of Mr. Boardman, he negotiated with Lennies and reached an agreement of $58,500, rather than the $74,490. Mr. Boardman stated Lennies has been paid the negotiated purchase price and Staff has sent a letter giving them 90 days in which to remove all personal items from the facility. He stated he needed official approval of the purchase price of $58,500, even though he had polled each HRA member by telephone earlier. • HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18, 1982 PAGE 7 MOTION BY MS. SVENDSEN, SECONDED BY MR. PRAIRIE, TO AFFIRM THE ACTION PREVIOUSLY TAKEN BY STAFF WITH REGARD TO THE RELOCATION COST OF $'58,500 FOR LENNIES LAUNDROMAT AND BILLIARDS. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. B. Report - Relocation of Fridley Auto Repair Mr. Boardman stated he received the report on the Fridley Auto Repair after the agenda was mailed out. He would like to discuss this item and possibly take some action while Mr. Von Klug was at the meeting. Mr. Comers stated since this again was not an ordinary approach where a payment is being recommended rather than the actual expenses incurred with the relocation of the business, he thought the HRA should have some time to review this approach and why. Mr. Von Klug stated that with business relocations, they have pre- dominately two types of payments: (1) actual and reasonable moving expenses -- within that is the cost of the personal property items such as professional services necessary for the moving of personal property, stationery reproduction, searching expenses, telephone, leased equipment . expenses; and (2) payment in lieu of moving and related expenses. The business has the option of selecting which type of payment it wants. The business has to meet three tests, the most crucial test is that the business cannot be relocated without a substantial portion of its patronage. They are under HUD regulations in this state because that is what the state law adopted. He stated their office tried to demon - strate the proof that there was a substantial loss of patronage in this case. Mr. Von Klug stated one of the considerations the agency has to take is increased operating expenses at the new location. So, their office has to take into consideration two major factors: (1) the business has to be assumed; and (2) if, indeed,there is going to be a substantial increase in operating expenses, is the business eligible in that respect? Mr. Von Klug stated the amount of payment is not based upon increased operating expenses. The Fridley Auto Repair went from a unit with an appraised value of $77,500 to a unit where they paid $200,000, plus they have increased operating expenses. As far as the amount of pay- ment, once the determination of eligibility has been made, the payment amount is based on average annual net earnings of the business averaged over two years prior to moving. The minimum payment is $2,500; the maximum payment is $10,000. With the Fridley Auto Repair's circumstances, they had approx. $30,000 of average annual receipts, so the payment was cut back to $10,000 which is the maximum possible payment under current legislation. . HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18, 1982 PAGE 8 MOTION BY MR. PRIEDITIS, SECONDED BY MR. PRAIRIE, TO APPROVE THE RELOCATION COST OF $10,000 TO FRIDLEY AUTO REPAIR. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. C. Bond Bid Opening (Memo #82 -81 from Executive Director) Mr. Boardman stated the tax increment financing bond base was officially opened on Nov. 8 at Ehlers office for the $600,000 HRA bonds related to the Fridley Plaza Office building. The bonds were sold for a 9.2605% interest rate based on the City's Aa -1 rating and was approved by the City Council that night at their meeting. D. Lease of Hardware Building for Proposed Retail /Liquidation Operation Mr. Boardman stated Mr. Dick Carson was at the meeting in regard to this lease request. Mr. Carson has made a proposal to lease the hard- ware building with an 18 -month lease and a month -to -month lease after that. Mr. Boardman stated that in discussions with Mr. Carson, the parking was discussed. The hardware building itself has a limited amount of • parking and this business would generate a need for more parking. Mr. Carson has worked with Fred Levy and they have reached an agreement on the parking situation. Mr. Commers asked for Staff's recommendation. Mr. Boardman stated that at $3 /sq. ft., it was the most advantageous offer they have had for the hardware building. He stated he would like to get the building leased, and he felt this was an adequate operation. It will probably generate quite a bit of traffic into the area. There has been concern expressed by the businesses in Holly Center that the walk -in business is down 60% and the businesses are having a difficult time. It is important to get something into the hardware building. Mr. Rasmussen stated he thought there should be more research into the kind of operation this is. He felt it was very important to have a financial statement, and at least some type of inspection of what the operation looks like. Mr. Carson stated he would be happy to provide the report. He had not been aware one was wanted. He store in Cambridge and would be happy to show them also be opening a store in Bloomington. He stated good location for his business and that the busine the community. A HRA with a financial stated he has a that store. He will he felt this was a is would be good for • HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18, 1982 PAGE 9 Mr. Rasmussen stated he was very concerned about this type of operation. Mr. Carson stated he would clean up the building and operate it as a clean, nice business. He did not plan to put a lot of money into the building with an 18 -month lease and a month -to -month lease after that. Mr. Commers stated he thought that if they can be provided with an adequate financial statement and that the Cambridge store, upon inspection by Staff, presents itself well, it would be better to have a business in that building than to leave it vacant. Mr. Prieditis agreed and asked Mr. Boardman to poll the members by telephone after this information has been obtained. MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO APPROVE THE LEASE OF THE HARDWARE BUILDING FOR A PROPOSED RETAIL /LIQUIDATION OPERATION SUBJECT TO THE FOLLOWING STIPULATIONS: 1. A SATISFACTORY LEASE BE NEGOTIATED BETWEEN MR. CARSON AND STAFF; 2. STAFF INSPECT THE OPERATION IN CAMBRIDGE AND PROVIDE A • POSITIVE REPORT; AND, 3. ACQUISITION OF A FINANCIAL STATEMENT AND THE GUARANTEES OF INDIVIDUALS Mr. Rasmussen stated he objected to a motion of that type on the grounds that it left the decision up to Staff. Mr. Commers stated that was a good point. It was a question of where they want to draw the line in delegating authority, and this too is a very arbitrary decision on what authority Mr. Boardman should and should not have. However, he would be comfortable with letting Mr. Boardman make the decision on this operation. UPON A VOICE VOTE, COMMERS, PRIEDITIS, SVENDSEN, AND PRAIRIE VOTING AYE, RASMUSSEN VOTING NAY, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED BY A VOTE OF 4 -1. E. Memo from Richard Larson - Re: Standard Oil Station Mr. Boardman stated this memo was in regard to the gasoline tank that is still underground at the Standard Station that the HRA presently owns. There is a Minnesota Uniform Fire Code that states that any underground tanks which have been abandoned for a period of one year shall be removed from the ground and properly filled. Mr. Boardman stated he had tried to delay on the removal of the tank until such a time as they had a developer and could go in on develop - ment costs. He had gotten some estimates last year on the cost of removal. He stated he would check into this again and keep the HRA members informed. a HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 18 1982 PAGE 10 III. MOORE LAKE DISTRICT A. Moore Lake Condominium Project Mr. Commers stated each of the members had received a handout entitled, "Proposed Project, Moore Lake Redevelopment District ". Mr. Boardman stated that at the last meeting, the HRA had requested Staff to put together a packet of information, including a letter, that was being proposed for mail -out to the residents prior to the public hearing on Dec. 9. He stated he would like them to look the information over to see if it was adequate for mailing. He stated slides have been taken, and there will be a slide presentation at the public hearing. The architect is working with City Staff in putting together a scale model of the project, and the architect is also doing a color rendering design of the building that will also be at the meeting. Mr. Boardman stated he would like the HRA to decide how far out they should mail the packet of information- -700 ft. or 350 ft. The normal process is 350 ft. It was the concensus of the HRA members that the packet of information be mailed out 350 ft. of the project site, with the exception that all the homes along Woody Lane also be included because of the visual site lines from the homes on Woody Lane. IV. OTHER BUSINESS: A. Minneapolis Star Tribune Article (Information only) Mr. Commers stated this article dated Nov. 4, 1982, was about an interview with Mr. Boardman regarding the Center City Project. B. Correspondence on Eisenhower Square Monument Mr. Commers stated there was a memo from Mark Burch, Asst. Public Works Director, to John Flora, Public Works Director, concerning the status of the monument. In the process of moving the monument to the Moore Lake location, it fell and broke. There is insurance coverage, and the rebuilding will be done in the spring. Also, the VFW is very satisfied with the new location at Moore Lake. They feel it is a much better location and will be more visible to the public. ADJOURNMENT: MOTION BY MR. PRAIRIE, SEC. BY MS. SVENDSEN, TO ADJOURN THE MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE NOV. 18, 1982, HOUSING & "REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 10:00 P.M. Respectfully sub fitted, yn Saba, Recording Secretary